With the elections coming up in South Australia, energy issues are a big ticket item with politics obfuscating informed knowledge. I will attempt a non-political review of the options for SA and their pros and cons.  Many of the basics have been covered in previous blogs and you may want to brush up on a few of these.

Politics brings in a lot of hysteria to the debate particularly around cost and reliability. In Australia, the average wholesale cost of electricity is around 8c per kWh, give or take a couple of cents, which is around 6c US and is around the middle of the pack world-wide.  SA wholesale power prices are on par and it has on average, less blackouts than NSW.  In the US, up to 5 million people at a time have suffered blackouts during storms, when nuclear power plants have been switched off for safety reasons.

There are serious issues however about decreasing retail costs and improving reliability and fixing environmental concerns. I will try to go through these objectively. It is a big and complicated issue, so I will break it up into a few blogs including fossil fuels, renewables, nuclear and other issues.

Please try to keep comments and questions devoid of politics. My wish here is that we develop a nation-wide bi partisan approach to resources and energy requirements.  Anything less will leave us all worse off.

Coal

Sunlight, via photosynthesis, creates carbohydrates in the form of plants. These are then used to provide energy for animals.  As the organic materials (plant or animal) burn or decay they lose their oxygen and become hydrocarbons.

The simplest is methane with a chemical formula of CH4 (often shortened to C1 ie 1 carbon atom in the molecule). They also produce more complex chains that are defined by the number of carbon atoms.  C1 and C2 (ethane) are collectively referred to as natural gas, while C3 to C5 are LPG or condensate.  Petrol, diesel, kerosene and oils are the more complex hydrocarbon chains (or mixes of them).

As hydrocarbons form in sedimentary basins the liquids and gasses are cooked out and generally separate from the original location, forming oil and gas pools in porous rocks. Once all of the hydrogen and oxygen are cooked out we are left with coal.

Early in the process coal starts out as peat and as it is cooked up it becomes brown coal or lignite, then sub bituminous coal, then black coal, then anthracite. The last is shiny black and is considered the best quality, with the least impurities.  Pure coal is simply a form of carbon. Mined coal is a sedimentary rock with many impurities.

In Australia we have a lot of high quality black coal, generally of Permian Age and it is mostly located along the east coast. The Cooper Basin in SA and Qld also has huge amounts of deeply buried Permian black coal and it is from these deposits that the oil and gas has migrated.  The coals are too deeply buried to be dug up, but companies are now trying to extract any remaining gas directly from the coals (Deep Coal Seam Gas).

South Australia also has black Permian coals in the Arckaringa Basin near Coober Pedy, but these deposits have been too hard to mine commercially as yet due to their depth and water content. There are no coals in SA that are suitable for shallow coal seam gas and it is highly unlikely that any such deposits will be forthcoming in this state.

Our coal fired power station at Port Augusta used slightly younger coal from the Triassic Age until it closed a couple of years back. This Leigh Creek coal is classified as grading from lignite to sub bituminous coal.  In Europe this would all be described as brown coal, but just to be confusing, Australian industry describes it as black coal.

Since the closure of the power plant and the Leigh Creek coal mine, there is talk of an underground coal gasification (UCG) project being planned.

Coal fired power stations are being shut down in Australia on a regular basis due in part to having reached their use by date and also partly by the perceived economics of the investors. With an estimated life of 40 – 50 years a reliable source of coal is required to build a new one.  No new coal power stations are currently being planned in Australia, to my knowledge.

No Australian government has stepped in to keep an old coal power plant operating anywhere in the eastern states. A major issue is taking on the liabilities of an old plant.  Western Australia decided to refurbish the 44 year old Muja coal power station in 2009 and after spending $200-300 million and a serious accidental explosion are now shutting the plant completely.

We are highly unlikely to build another coal fired power station in South Australia in any possible near future scenario. We will however still use coking (or metallurgical) coal in our Whyalla steel plant and this is also used to produce electricity at that plant.  Sanjeev Gupta may have other plans, but I have no knowledge of any substitution for coking coal.

Oil

Electricity generation is only part of the energy use in SA, with transport fuels another big issue. These are almost 100% fossil fuels and nearly 100% imported. Petrol, diesel and kerosene (Avgas) are all oil products and all have their environmental and Green House Gas (GHG) issues.

In SA we only produce a small amount of oil from the Cooper / Eromanga Basin. The latter overlies the Cooper Basin and is also part of the Great Artesian Basin (GAB).  Oil and gas naturally escape the Cooper Basin coals and leak into the Eromanga Basin.  The gas largely dissolves in the vast quantities of water while the oil floats and can be extracted from the high points.

Importing oil for our transport needs requires significant shipping of product around the world, with its associated risk of spills. Shipping and oil transport account for much more oil spilling into our oceans than oil exploration does.

Despite our best intentions, there is no chance that we will all be driving fossil fuel free cars in the next ten years and we will therefore require oil exploration or imports for the foreseeable future. More on this in the renewables section.  There are some options, should we decide to develop them, as I will discuss later.

Gas

While we have little oil in SA, we have plentiful natural gas. We discovered the gas in the Cooper Basin in the 1960s and built pipelines to Adelaide, Brisbane and Sydney to access it.  An ethane pipeline was also built to supply Sydney with feedstock for its burgeoning plastics industries.

These pipelines were financed by long term gas contracts with fixed gas prices. Today the contracts have been completed and new, largely secret deals have been done to buy and sell gas.  Long term gas contracts also meant that gas power plants could also be financed.

Without long term contracts for specific amounts of gas, gas will be expensive and pipelines and power stations difficult to finance. AGL are currently looking at importing LPG from offshore as a reliable source of energy for their new Torrens Island Power Plant.

Some of SA’s largest employers are the gas companies and these companies have significantly improved their viability by opening up international markets by creating LNG (Liquefied Natural Gas). While C2-C5 are liquid under a very slight pressure (eg a plastic cigarette lighter), it takes a lot more energy and effort to liquefy C1 and make it transportable.

Natural gas is used to generate electricity, for household heating and cooking, plastics and fibre glass production, plus pharmaceutical, fabric and fertiliser manufacture. LPG is used as bottled gas and transport.  The vast majority of us use gas and gas products daily, including practically all of our clothing.

Offshore gas requires long pipelines to be built or floating LNG plants installed. Gas is plentiful, particularly offshore, but requires a long term, contracted market to keep prices down.  Developing offshore reserves has substantially increased the amount of gas available but has also increased prices.

Locally, we have the ability to find new gas, as has been demonstrated by the recent Haselgrove 3 discovery near Penola. New gas discoveries will require government support for land access and approval of stimulation techniques, including hydraulic fracturing.  You will need to check your political party’s policies and see how they match your views on how to proceed with fossil fuels in the near and long term.

Fraccing has not been required to date for any wells in the southeast. In the Cooper Basin it has been a regular part of gas extraction since the early 1970s with over 700 fracs completed.  We have no shallow CSG but we do have potential for deep shale gas, mostly in the Cooper Basin, but also possibly in the Otway and Arckaringa Basins.  There is also a good chance for offshore gas in the Bight and possibly offshore Otway.  There may also be oil in the offshore Bight area, but we won’t know until we drill, but to date, the state has been gas prone.

Coming Up

Renewables, storage, nuclear, self-sufficiency, energy mix. You can also follow up with more detail in my other blogs.

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